KUALA LUMPUR: CIMB Securities Sdn Bhd has downgraded Alliance Bank Malaysia Bhd to Hold from Buy, citing a subdued earnings outlook and limited upside potential after the recent rebound in its share price.
The firm trimmed its target price (TP) to RM4.70 from RM4.80 to reflect expectations of a softer return on equity (ROE) of 9.2 per cent versus 9.7 per cent earlier.
It cautioned that the bank’s earnings momentum is likely to remain under pressure over the next six to nine months due to an asset-liability mismatch following the 25 basis-point overnight policy rate (OPR) cut in July, coupled with potential asset quality deterioration in the second half of the financial year ending March 31, 2026 (FY26).
“Although Alliance Bank delivered steady operating income growth of 14 per cent year-on-year in Q1 FY26 and a net profit of RM198.7 million, the balance of risk for the next six to nine months is tilted to the downside,” the firm said.
CIMB Securities said the bank’s loan growth of just 0.5 per cent quarter-on-quarter lagged its full-year target of 8 per cent to 10 per cent.
Meanwhile, current account and savings account growth also stagnated, while higher-cost fixed deposits surged 21.4 per cent year-on-year, compressing its funding mix.
CIMB Securities noted that impaired consumer loans rose 7.2 per cent quarter-on-quarter, led by classic mortgage accounts and Alliance One Accounts, while SME loans showed early signs of stress.
Nevertheless, it said most impaired consumer loans remain well secured, with about 90 per cent backed by collateral.
“Within personal financing, the gross impaired loan ratio remained stable at 1.3 per cent, suggesting contained risk in this sub-segment despite a more challenging household environment,” it added.
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